Dow Jones futures, S&P 500 futures, and Nasdaq futures saw minimal changes overnight, with heavy drops from Trade Desk (TTD) on guidance. The stock market rally saw a pullback as the S&P 500 and Nasdaq composite broke long win streaks alongside a spike in Treasury yields following a poor 30-year Treasury bond auction. Fed chief Jerome Powell stated that the central bank is “not confident” they’ve done enough to contain inflation. Despite the pullback, Thursday still brought several earning gap-ups, including Duolingo (DUOL) and Affirm Holdings (AFRM). Nvidia (NVDA) broke out on Thursday morning but saw slashed gains, while Tesla (TSLA) tumbled from key levels. China’s Li Auto (LI) reported strong earnings, and EV and battery giant BYD (BYDDF) launched their first off-road vehicle via their new F-brand. Thursday, however, saw falls in both LI and BYD stock, but they remain close to early entries. Although the market pullback may provide constructive opportunities, allowing the major indexes and leading stocks to catch their breath, Trade Desk earnings and revenue modestly topped Q3 views post-close, but the digital ad platform guided low on Q4 revenue, causing TTD stock to drop more than 25% in overnight action. Meanwhile, ANET stock fell solidly in extended trade, though off initial after-hours lows. Late Thursday, Arista Networks (ANET) guided 2024 revenue growth fractionally below consensus at its Cloud and AI Innovators event. Nvidia stock is on IBD Leaderboard, while Li Auto, Nvidia, Trade Desk, MercadoLibre, Arista Networks, and DUOL stock are on the IBD Top 50. Dow Jones Futures Today increased 0.1% vs. fair value, while S&P 500 futures tilted higher, and Nasdaq 100 futures declined 0.1%. The 10-year Treasury yield edged down to 0.0461%. It’s essential to remember that overnight action in Dow futures and elsewhere doesn’t always translate into actual trading in the next regular stock market session. Also, the stock market rally saw a retreat, with the S&P 500 snapping a long win streak and the Nasdaq declining for the first time in 10 sessions. Fed chief Powell stated that policymakers are committed to bringing inflation back down to 2% but are “not confident” they’ve done enough to achieve that goal. However, Powell did not indicate plans for a rate hike, stating that the central bank would act “carefully.” The market saw little possibility of a rate hike at the next few meetings. The Treasury bond auction and Fed chief Powell may have given investors an excuse for profit taking, with the Nasdaq and S&P 500 just below their October highs, at what could be a natural place to encounter resistance. The market breadth was weak, with decliners trumping winners on the NYSE and Nasdaq. Technology, especially software, along with aerospace names, some financials, and some discount retailers, are doing well. DUOL stock, Affirm, TransDigm (TDG), and software maker Vertex (VERX) were the latest with earnings gap-ups. Among growth ETFs, there was a dip in the iShares Expanded Tech-Software Sector ETF (IGV) and the VanEck Vectors Semiconductor ETF (SMH). Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) skidded 3.1%, and ARK Genomics ETF (ARKG) sold off 4.3%. TSLA stock is still a major component across Ark Invest’s ETFs. SPDR S&P Metals & Mining ETF (XME), SPDR S&P Homebuilders ETF (XHB), and Health Care Select Sector SPDR Fund (XLV) also saw declines. Additionally, five Chinese stocks to watch now include Nvidia stock, MercadoLibre stock, Palantir stock, Tesla stock, along with Li Auto stock.
